Investors should take comfort knowing that share prices are not fighting the forces of gravity when they move higher and have confidence that record highs only tell us the system is working just as we would expect—nothing more.
Read more below to find our market review and outlook on the recent activity in the US market over the fourth quarter of 2021.
Although global growth has slowed recently, the U.S. economy should fully recover from the pandemic during the first quarter of 2022. This will occur when actual GDP rises to the level of GDP forecasted by its long-term growth trend had the economy continued to expand instead of entering recession in the first quarter of 2020.
With the economy starting to recover from the COVID-19 pandemic and investor concerns turning increasingly toward inflation, Dimensional Founder David Booth talked with Nobel laureate Eugene Fama about inflation and how investors should think about it in their portfolios. Excerpts from their conversation have been edited for clarity.
The second quarter’s economic surge encourages a full recovery to pre-pandemic GDP by the end of 2021. Additionally, the robust economic recovery belies difficulties in the labor market as jobs and unemployment both rise above expectations, and pent-up demand is driving inflation higher, which is certain to test the Fed’s rate targeting policy.
The nearly 6,000-page Bill passed with overwhelming bipartisan support and was signed by the President.